China Regulatory Brief: Revised Negative List for the Shanghai FTZ & IIT Collection in Beijing

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Shanghai FTZ Releases New Negative List

On July 1, the Shanghai municipal government released the “Special Administrative Measures for Foreign Investment Access in the China (Shanghai) Free Trade Zone (Revised Negative List 2014).” The revised Negative List reduces the number of industries restricted for foreign investment by 27 percent to 139 from a previous total of 190, including those in manufacturing, transportation and retailing. Foreign investors shall enjoy equal treatment as Chinese domestic enterprises in any industry not explicitly restricted or prohibited on the Negative List.

For in-depth coverage of the new negative list, see our article here.

China Approves the Establishment of Dalian Jinpu New Area

The State Council recently released the “Circular on Approving the Establishment of the Dalian Jinpu New Area (Guo Han [2014] No.76)” to promote further reforms in northeastern China and boost regional cooperation with Northeast Asian countries. Located in south-central Dalian, Liaoning Province, the Jinpu New Area covers an area of 2,299 square kilometers. As the 10th state-level “new area” in China, Jinpu is expected to help build Dalian into an international shipping center and logistics hub.

China-Switzerland FTA Comes into Force

On July 1, the free trade agreement (FTA) signed between China and Switzerland came into effect. Under the FTA, 84.2 percent of the Swiss imports will be exempt from tariffs, either immediately or gradually over the next 5 to 10 years. Consumers in China can expect more affordable Swiss goods, including cheese, luxury watches, chemicals and fine machinery. Meanwhile, Switzerland will implement zero tariffs on 99.7 percent of Chinese imports, mainly textiles, agricultural products and industrial goods. The FTA is expected to promote economic growth and development in both countries.

For in-depth coverage of the China-Switzerland FTA, see our article here.

Beijing to Reinforce IIT Collection for Foreigners

The Beijing Local Taxation Bureau and Beijing Public Security Bureau have jointly decided to reinforce IIT (individual income tax) collection for foreigners. Foreigners who fail to pay IIT on time will not be allowed to leave China. The reinforcement is expected to resolve discrepancies in IIT declaration of foreigners working in Beijing.

Shenzhen Adjusts Base Figure for Social Insurance Contributions

On June 30, the Shenzhen Human Resources and Social Security (HRSS) Bureau released the “Circular on Adjusting the Base Figure for Social Insurance and Reimbursement Contributions (Shen Ren She Fa[2014] No.52).” The base figure, which is used to calculate social insurance contributions, is derived from the average monthly wage of employees for the relevant city/province in the previous year. According to the Circular, from July 1, 2014 to June 30, 2015, the average monthly wage of employees during the previous year (i.e., the base figure) was RMB 5,218. Social insurance contributions are generally based on employee monthly salaries, but cannot be higher than 300 percent of the base figure released by the local government, nor lower than the city’s minimum monthly wage level.

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